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Cargill quarterly profit dives 41% on trade tensions, US floods
15.07.2019 10:09 "Agro Perspectiva" (Kyiv) —
As of last week, the global goods’ trader Cargill Inc [CARG.UL] reported a 41% drop of its adjusted quarterly profit, citing its shipments’ disruptions stemming from the US-China trade war and also flooding within the central United States that hit marketing and transportation of grains and livestock, Reuters says referring to the Cargill report.
It is to be admitted, Cargill is the largest privately held US company.
As to Cargill, its adjusted operating profit fell to US$476 million within the fiscal fourth quarter ended this year May 31 (down against last year similar US$809 million), as three of its four business units posted lower year-on-year results.
As to the report, trade tensions between Washington and Beijing have battered the U.S. agricultural sector as tit-for-tat tariffs have reduced commodities exports from the United States and redrawn global trade flows. Severe spring flooding across the US farm belt added to the struggles.
«When you combine the weather with the trade war, it’s just a challenging time for the industry,» David Dines, Cargill Chief Financial Officer, admits.
It is to be noted, the Minnesota-based Cargill is the first of the major grains’ traders to report earnings since US-China trade talks broke down and persistent rains led to the slowest US spring planting season on record.
Thus, the Cargill animal nutrition and protein segment posted a lower year-on-year profit for the third time in four quarters as poor weather disrupted U. S. Midwest cattle shipments and reduced demand for beef for outdoor grilling. Reduced hog feed demand within China, where a deadly hog disease called African swine fever has decimated the industry, further dampened results.
It is to be admitted, the profit for the Cargill origination and processing business fell from an exceptionally strong fourth quarter last year as flooding across the central United States disrupted grain transportation and exports.
Also, US farm product exports faced stiff headwinds as tariffs on US goods imported by China (world top soybean buyer and major importer of various other agricultural goods) remain in place.
In meanwhile, Cargill expects to reverse some mark-to-market losses from declining soybean prices later this year as beans are processed and soy products are sold.
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